Studies on primary human and rodent hepatocellular carcinomas have strongly suggested that a transforming ras gene may participate in the initiation and/or maintenance stages of liver neoplasia. However, the function and exact phenotypic alterations caused by expression of a ras oncogene in the liver has yet to be described. To define the function and phenotypic characteristics associated with a transforming ras gene in liver, we have utilized a retroviral shuttle vector system to deliver an inducible ras oncogene into normal rat liver epithelial cells (RLE cells). The Moloney murine sarcoma virus-based vector is composed of a neomycin resistance (NEO) gene (transcriptionally derived from the 5' long terminal repeat (LTR) and transforming Ha-ras gene under the transcriptional control of the glucocorticoid inducible LTR of the mouse mammary tumor virus (MMTV) (Cell 27: 245, 1981). Southern, Northern and Western blot analysis confirmed stable proviral integration, ras gene transcription with polyadenylation and translation into a 21 K dalton protein with a specific mutation in codon 12. Northern and SI nuclease analysis confirmed that dexamethasone induced ras transcripts from the MMTV LTR by 15-fold. Phenotypic alterations specifically associated with ras expression in these normal liver epithelial cells include: (1) alterations in growth kinetics; (2) ability to grow in soft agar and produce tumors in nude mice: (3) increases in metabolic rate determined by 2-deoxy-glucose uptake; and (4) becoming positive for gamma- glutamyltranspeptidase activity.